I am starting to wonder if any of us ordinary South Africans have any real idea of how widespread fraud is in the property industry? I was quietly reflecting on this as I drove down the highway between Pretoria and Johannesburg.
There is Brusson Finance (liquidated now it seems) involved in ripping-off people’s houses through an elaborate scheme of buying and selling. Again this elaborate scheme is the one that has been investigated. What about the many others that haven’t?
There are the land reform claims where the government has undertaken to buy properties and then failed to pay for them. One miserable reader wrote to me about how he’d had has land bought by government, then had put in a binding offer on a new farm on the strength of the government’s offer. The government hadn’t paid so he was sued for the outstanding balance on the farm he intended to buy.
In the process, he lost everything and is still waiting for the government to pay him for the farm that it has promised to buy. There are bound to be many more similar tales because the government has admitted that it has failed to pay for the farms it promised to buy.
There are the contractors who have built bad houses in provinces throughout the country and have then vanished into the dead of night leaving unhappy homeowners in uninhabitable homes with no one to turn to. These are the homeowners who’ve objected. What about those that haven’t? Who simply tried to grin and bear it?
There are the estate agents who have sold properties off plan (and in good faith) only to discover, six months later, that the developer has gone insolvent and the estate will never be completed. Some of these we know about. Others we’re still waiting to discover.
And there are the property syndication schemes too, where investors put money into seemingly legitimate commercial property developments only to discover that the promised monthly instalments are not forthcoming and the syndicated property is actually worthless.
The picture is truly depressing in a market where property sales are dwindling and where banks are reluctant to lent money to would-be homeowners anyway. Given the level of property fraud can you blame them?
I think that the time has come for someone in the private sector, such as Willem Heath or Willie Hofmeyr to actually embark on a detailed investigation into the rip-offs that occur in the property industry. The organisations that should be doing so, like the Estate Agency Affairs Board, the South African Property Owners Association, the National Home Builders Registration Council, the Master Builders’ Associations and many others are simply failing to do so.
So Mr and Mrs Consumer, out there in the street, clutching their investment cash (in one form or another) continue to be ripped-off by unscrupulous people who don’t bat an eyelid as they take someone else’s money and run.
And to tell you the truth, I am heartily sick of it.
We’ve witnessed repeated property atrocities down the years (you remember the huge Masterbond scandal of the mid-1980s) and we’ve done nothing to tighten up the legislation to prevent the continued scams from emerging. We’ve done nothing to prevent illicit and illegal property transactions taking place time and again. Worst of all, we’ve done very little to actually put the fraudsters so deeply behind bars that they never see the light of day again.
And we’ve seen suicides among investors who have lost everything. We’ve witnessed families being shredded by the hardship of losing a home that they thought they legitimately owned; we see the tearful pensioners who now have nothing left to live on because all their money has been scammed from them.
And the cycle goes on and on ad nauseaum.
Don’t fool yourselves: it’s not just the naïve first-time homebuyer who gets ripped off either. Experienced people who have been involved in buying and selling homes for many years are just as vulnerable,
One such woman who wrote to me recently to say: “Everyone’s sorry for the homeowners who got ripped off by Brusson Finance. But what about the investors? We didn’t know exactly what was going on because we were never told the full story behind the investment. That only came out later when Brusson was taken to court,” she writes. “I’ve got my home now but I can’t afford to keep up the payments on the bonds taken out in my name. So now I’m likely to lose everything.”
I sympathise with her because I have no doubt that she wasn’t told the full story and probably didn’t know that more than one bond was being registered in her name either.
Of course, the cynic in me says that she was looking for an easy way to make money and everyone knows that there isn’t an easy way to do so. But I do have an inkling that she was duped too. Just as the farmer was duped when he believed the official government letters assuring him the full purchase price for the farm would be paid within X number of days.
I really would like to see some kind of official body being formed to investigate all these shady malpractices in the property industry and (as I’ve said before) I would happily be a part of such a body because I really do believe that we, as a society, have to stop the plethora of property fraud in this country.
And if we don’t start doing something about it now then it is going to continue unabated.
So this is a direct appeal to bodies such as the Special Investigations Unit, to Heath Executive Consultants, to the Estate Agency Affairs Board, the South African Property Owners’ Association and even the Financial Services Board to set up an organisation that will track down and prevent property fraud in South Africa.
After all, a property is the single most important investment any family can make and it needs to be diligently and properly protected at all times. And with so many fraudsters out there it’s essential that something is done to provide proper protection to the people of South Africa.
And it’s up to us to make it happen because, believe me, the police aren’t about to protect our property and they simply don’t have the manpower to investigate the frauds.
So we must do it.
And I would happily make myself part of any such initiative.
*Hartdegen writes a regular column for Property24.com. The content of his columns constitutes his personal opinion and doesn’t pretend to be facts or advice. Contact him at paddy@neomail.co.za.
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